Stapleton v NTI Limited[2002] QDC 204

DISTRICT COURT OF QUEENSLAND

1. [1]
   The plaintiffs were at the relevant time the owner of a 1989 Ford LTL Prime Mover which was within a motor vehicle insurance policy issued to them by the defendant. On 31 August 2001 the prime mover was damaged in a road accident on the Mt Lindsay Highway near Beaudesert during a journey to Sydney, as a result of which the plaintiffs have suffered loss. The plaintiffs made a claim on their insurance policy which was rejected by the defendant.

2. [2]
   On 11 December 2001 the plaintiffs commenced proceedings in this court seeking $77,050 together with $1,500 per week as a continuing loss until judgment as money payable under the policy. In its defence filed 17 January 2002 the defendant alleged, inter alia, that the plaintiffs’ prime mover was not covered by the contract of insurance because at the time of the loss the prime mover was travelling on a journey of which the destination was beyond a 450 kilometre radius from the plaintiffs’ home base, at Jimboomba in Queensland. In the reply filed 18 February 2002, the plaintiffs alleged that on its true construction the insuring clause of the policy covered the prime mover, and although it was being operated on a journey where its destination was in excess of the territorial limit, that could not reasonably be regarded as capable of causing or contributing to the loss in respect of which insurance cover was provided by the policy, and no part of the loss that gave rise to the claim under the policy was caused by that fact, so by s 54 of the Insurance Contracts Act 1984 the defendant did not have the right to refuse the claim.

3. [3]
   By an application filed on 18 June 2002 the defendant sought an order pursuant to r. 483 that the court decide in advance of deciding the other questions of the proceeding the question of whether (on the facts agreed between the plaintiffs and the defendant) s 54 of the Insurance Contracts Act 1984 (Cwth) applies so that the defendant may not refuse to pay the plaintiffs’ claim, and for an order that the court hear and determine that question instanter.  Both parties supported this approach, although arguing for different answers to the question, and I will adopt it.

Facts

4. [4]
   For the purposes of answering that question, the parties have agreed on a list of facts which was filed on 18 June 2002. Those facts are as follows:

1. At all material times the plaintiffs were the owners of a 1989 Ford LTL 9000 Prime Mover registration number 534 EQB, engine/serial number 332 11775 (‘the prime mover’).

2. At all material times the defendant:

1. (a)
   was a company duly incorporated;

2. (b)
   carried on business of insurance underwriting.

3. In or about October 2000 the plaintiffs and the defendant, as insurer, entered into a contract of insurance no 05905403, a true copy of which is annexed and marked ‘A’ (‘the policy’).

4. The prime mover was a motor vehicle described in the schedule of the policy.

5. There was a closing instruction from East West Insurance Brokers Pty Ltd, the brokers for the plaintiffs, to the defendant (‘the closing’).  A true and correct copy of the closing is annexed hereto and marked with the letter ‘B’.

6. On 31 August 2001 the prime mover was damaged (‘the damage’) in a road accident on the Mt Lindsay Highway, approximately 10 kilometres south of Beaudesert (‘the accident’).

7. The damage was damage to the prime mover within the meaning of the policy.

8. The location of the accident where the damage occurred with within 450 kilometres of the plaintiffs’ base of operations in Jimboomba.

9. The damage arose out of an ‘accident’ within the meaning of the policy.

10. At the time that the accident occurred, the prime mover was being operated on a journey where part of its destination was Sydney, being a place in excess of 450 kilometres from the plaintiffs’ base of operations in Jimboomba (‘the act’).

11. On or about 3 September 2001 the plaintiffs submitted a claim to the defendant for indemnity under the policy for the damage.  A true copy of the claim is annexed and marked ‘C’ (‘the claim’).

12. A written proposal was made by the plaintiffs to the defendant for the policy.

13. The plaintiffs had paid the premium due under the policy to the defendant by the payment date in the policy.

14. The accident occurred during the period of insurance stated in the schedule of the policy.

15. The prime mover was being used in connection with the occupation or business of the plaintiffs within the meaning of the policy.

16. No part of the loss, comprising the damage, that gave rise to the claim was caused by the act.

17. The defendant’s interests were not prejudiced as a result of the act.

The law

5. [5]
   The relevant part of s 54 of the Insurance Contracts Act 1984 (Cwth) provides:

6. [6]
   The agreed facts exclude the operation of subsection (2) of the section, and it is not submitted that any of the other subsections were relevant.

7. [7]
   Section 54 has been the subject of a good deal of judicial attention in recent years, particularly in the context of indemnity insurance, culminating in a decision of the High Court in FAI General Insurance Co Ltd v Australian Hospital Care Pty Ltd (2001) 204 CLR 641.  Both parties addressed their submissions principally to the effect of the joint judgment of McHugh, Gummow and Hayne JJ, although reference is also made in the concurring judgment of Kirby J.  Insofar as the latter differs in a matter of principle however it would not be taken to represent the law in the area.  In that case a contract of professional indemnity insurance issued by the appellant provided for indemnity for the respondent for claims made during a specified period of cover, and also provided that if during that period the respondent should become aware of any occurrence which might subsequently give rise to a claim, and should during that period give written notice of the occurrence to the appellant, any such claim which might subsequently be made against the respondent was to be deemed to have been made during the period of cover.  During that period the respondent became aware of an occurrence which might subsequently give rise to a claim within the policy, but did not notify the appellant of that.  A claim was subsequently made after the expiration of the period of cover.  It was held by the majority that the appellant could not refuse indemnity in respect of the claim, because the respondent’s failure to notify the appellant of the occurrence was an omission and hence an act for the purposes of s 54(1).

8. [8]
   The joint judgment made a number of points at the outset (page 652):

9. [9]
   Later the joint judgment rejected the existence of a distinction between the cover provided by a policy and a condition or exclusion on the other hand, as a distinction which depended on the form of the contract not on its substantive effect (page 656):

“No distinction can be made, for the purposes of s 54, between provisions of a contract which define the scope of cover, and those provisions which are conditions affecting an entitlement to claim.  The substantive effect of the contract can be determined only by examination of the contract as a whole.”

10. [10]
    The joint judgment went on to overrule the decision in FAI General Insurance Co Ltd v Perry (1993) 30 NSWLR 89, and rejected the reasoning in Greentree v FAI General Insurance Co Ltd (1998) 44 NSWLR 706 and Permanent Trustee Australia Ltd v FAI General Insurance Co Ltd (1998) 44 NSWLR 186, although the actual decisions in those cases were said to be right:  page 658.

11. [11]
    The joint judgment went on (at page 659) to emphasise that s 54 directed attention to the effect of the contract of insurance on the claim which the insured has in fact made. Hence in the case of a policy providing an indemnity in respect of a demand made by a third party on the insured during the period of cover, the claim could not properly be described without a temporal element, for the period of cover, and therefore the policy could not apply to a claim made outside that period. It could not be said that the claim made outside that period was rejected by the insurer only because of some omission by someone, namely the omission of the third party to make his demand during the period of cover. On the other hand, it appears to follow the reasoning of the majority that, if a demand is made during the period, but not notified to the insurer, the omission to notify does bring into operation s 54(1) even though the policy on its face provided cover only in respect of demands ‘made and notified’.

12. [12]
    It was then said that (at page 659-60): “If an insurer ‘become[s] aware of any occurrence which may subsequently give rise to a claim’ during the period of cover, an event of the type contemplated by the contract of insurance has occurred. Any subsequent claim would be for indemnity against demand of the type covered by the contract.” Hence it was of no consequence that the insured did not give notice of the occurrence during the period of the contract. Accordingly the joint judgment distinguished between a reason for refusal because of some act or omission of the insured or some other person, and a reason for refusal being that the policy did not extend to the demand referred to in the claim for indemnity: page 660.

13. [13]
    Their Honours obviously distinguished between restrictions which were “inherent within a claim”, which could not be overcome by reference to s 54(1), and other restrictions to which s 54(1) would apply if they fell within the literal terms of that subsection.  The difficulty that I find is in determining how to distinguish between restrictions inherent in a claim and other restrictions.  The distinction cannot be on the basis of those elements of an entitlement to be paid under the policy which involve some act or omission of the insured or a third party, because effectively all of the elements of the policy under consideration in that case involved some act or omission of someone:  the third party made a demand, and the insured gave a notice, in the case of a “claims made and notified” policy.  In the case of a “discovery” policy, there had to be an occurrence which may subsequently give rise to a claim (which would involve an act or omission on the part of someone), an insured becoming aware of that (which involves an act on the part of the insured) and the insured giving notice of that within the period of the cover, which also involves an act on the part of the insured.  Their Honours seemed to regard the act of the insured becoming aware of the occurrence as a restriction inherent within a claim, but not the act of giving notice of the occurrence to the insurer within the period of the policy, although I have some difficulty in determining from their Honours’ reasons how they distinguished between those two restrictions.  It is unhelpful to say that this is a matter of construction of the policy, with the focus on the substantive effect rather than the form of the contract.

14. [14]
    Take a policy which provides cover against theft in respect of particular property, but only while it is locked in a safe, or subject to a condition that the property be locked in a safe, or where the policy has an exclusion in respect of losses which occur when the property is not locked in a safe. All of those three forms of policy provide in substance the same protection, but if the property is stolen at the time when it is not in the safe (because the insured has omitted to put it in the safe), how does a court determine whether the presence of the property inside the safe is one of the restrictions inherent within the claim, or is not, so that the omission to place the property in the safe will be subject to the operation of s 54(1)? (I suspect that in practice such a situation would commonly fall within s 54(2).)

15. [15]
    It is also disconcerting to see the section being construed in a way in which it does not appear to have regard to the mischief which s 54 was intended to remedy, notwithstanding that it is regarded as remedial legislation. There also does not appear to be any recognition of the need to construe the subsection (indeed the section) as a whole so as to assess whether the literal application gives rise to results properly regarded as absurd. Later on it was acknowledged that no prejudice to the insurer’s interest was suggested (page 660) but that was apparently on the basis of the established jurisprudence as to what is involved in the concept of prejudice to the insurer for the purpose of the latter part of ss (1).^[2]  It is a little surprising to see a conclusion reached that the difficulties apparently flowing from this interpretation of the subsection are more apparent than real without some analysis of the way in which the subsection as a whole will operate.

16. [16]
    There is some discussion of the history of s 54 in the judgment of Kirby J at page 671 which suggests that the mischief aimed at was the loss of a claim by an insured as a result of some act or omission by the insured that occurred after the situation or event which gave rise to a right to claim, that is a failure to give notice of the relevant circumstances within a period of time required by a policy, or to comply with some condition of the policy which required something to be done or perhaps not done after a relevant event had occurred. Possibly as a result of this His Honour, although rejecting judicial attempts to confine the operation of s 54, accepted that there is a control in the operation of the subsection, being “the causal relationship posited by the provision that where the preconditions set forth in s 54(1) of the Act apply ‘the insurer may not refuse to pay the claim by reason only of that act [or omission]’”.  p.674.  Kirby J continued at p.675:  “In Greentree … the real explanation of why the failure of a third party to make a claim on the insured in that case would not attract remedial intervention under s 54(1) of the Act is that the insurer’s refusal to pay the claim was not “by reason only of that [omission]’.  On the contrary, it was a refusal “by reason of” the fact that the contract of insurance did not respond to the precise facts as found.  …   Similarly, the “omission” of the insured to take steps, prior to a loss, to elect an expanded form of cover, would not be an “omission” of the kind which would attract relief under s 54(1) of the Act.  In such a case, the reason for the insurer’s refusal to pay would be classified by the law as the absence of relevant cover between the insurer and the insured, not the omission of the insured to obtain a cover that was more ample.”

17. [17]
    That approach would with respect in my opinion be easier to apply, and be more closely directed to the mischief to which the legislation was originally directed than the approach apparently adopted in the joint judgment. However, it is not the authoritative exposition of the operation of the section.

The policy

18. [18]
    The policy issued by the defendant in the present case provided, on its first page: “Subject to the terms, conditions and exclusions of this policy as agreed by you and us, we agree to provide indemnity in respect of any motor vehicle described in the schedule against loss damage or liability as hereinafter mentioned arising out of an accident or theft, provided (1) you have made a written proposal/declaration to us for this insurance, (2) you have paid the premium to us by the payment date, (3) your accident or theft occurs during the period of insurance stated in the schedule, (4) your motor vehicle is being used in connection with your occupation or business, or in the case of a sedan or station sedan, your occupation, business or private use”. The policy contains a number of exclusions of which the last, number (10), provided: “We will not pay for …. loss, damage, liability and/or compensation for damage caused to or by your motor vehicle whilst your motor vehicle is being operated on a journey where any part of its destination was in excess of the nominated radius from your base of operations stated in the schedule.”

19. [19]
    There are a variety of other exclusions, which do not arise in the circumstances of the present case, but many of them seek to limit the scope of the policy by reference to some act or omission of some person. For example, there is an exclusion of liability which would not have attached but for some undertaking or agreement by the insured, an exclusion where the motor vehicle was being driven by or in the charge of any person under the influence of any drug or intoxicating liquor, an exemption if the vehicle was engaged in racing or other particularly dangerous forms of driving, or if the vehicle was being driven by an unlicensed person, was being used for conveyance of passengers for hire or reward, was subject to any agreement for hire, lease or loan to any other party, was being used for the transportation, loading, unloading or storage of various types of dangerous goods, an exemption if the loss involved theft of a motor vehicle by an insured or various other specified people, and an exemption for loss or damage or liability caused by various things including war, invasion, act of foreign enemy, rebellion, revolution, insurrection or usurpation of power, all of which would involve acts on the part of someone, commonly large numbers of people.

20. [20]
    It is difficult to believe that the legislative intent was that s 54 would overcome or neutralise all of these or similar exclusions from the operation of such a policy; however, the operation of s 54(1) in relation to all or most of these provisions would be excluded by the provision that an act in respect of which ss (2) applies, that is an act which could reasonably be regarded as being capable of causing or contributing to a loss in respect of which insurance cover is provided by the contract, is not within ss (1). In relation to many of these exclusions therefore no question could arise as to the operation of s 54(1) because the relevant act (or omission) came within ss (2). As it was put in Ferrcom Pty Ltd v Commercial Union Assurance Co of Australia Ltd 1993 176 CLR 332 at 339:  “Section 54 prescribes the effect to be attributed to two classes of act:  an act that could reasonably be regarded as being capable of causing or contributing to [the] loss [s 54(2)] and an act that could not reasonably be so regarded.  Subsection (1) relates to acts or omissions occurring after the contract of insurance is entered into that could not reasonably be regarded as being capable of causing or contributing to the loss:  subsections (2) – (4) relate to acts or omissions that could reasonably be regarded as being capable of causing or contributing to the loss.”

21. [21]
    In the present case it is agreed that no part of the loss which gave rise to the claim was caused by the fact that the prime mover was being operated on a journey where part of its destination was in excess of 450kms from the plaintiffs’ base of operations, so ss (2) does not apply and it is therefore necessary to consider the effects of ss (1).

22. [22]
    The policy in this case is different from the type of policy considered by the High Court in Hospital Care;  the difference arises from the fact that insurance policies are not contracts of indefinite duration, but operate by reference to a particular period, the term of the policy, and it is necessary for the contract to identify what it is that must occur within the term of the policy to distinguish between those events which give rise to an entitlement to be indemnified under the policy and those events which do not.  This is because the existence of a period of cover in the policy necessarily means that there must be some temporal element to the claim, as recognised in the joint judgment at p. 659.  That case dealt with demands made by third parties, and what were described as “discovery” contracts, but in the present case the temporal element is provided by the requirement that the accident or theft which gives rise to the loss must occur during the period of insurance stated in the schedule.  Accordingly this is what the High Court described at p. 659 as an “occurrence” based contract in respect of which the joint judgment said, at that page:  “No claim can be made under the contract unless the event insured against takes place during the period of cover”.

23. [23]
    In these circumstances, it is necessary to identify the “event insured against” which can be the basis of a claim. Unless such an event occurs, the insurer will be entitled to reject any claim which is made, not on the basis of any act or omission on the part of the insured or any third party, but because there has not been an event which gives rise to a claim under the contract. In order to determine what it is that defines the event, it is necessary to identify, as a matter of construction of the policy, the restrictions or limitations which are inherent in the claim because they define the event insured against under the policy. Once they are identified, the section does not operate to relieve the insured of those restrictions or limitations: p. 659.

24. [24]
    It is unnecessary in the present case to identify all the restrictions and limitations which must apply in order to define the precise boundaries of the event insured against. The matter at issue before me is whether on the true construction of the policy one of those restrictions or limitations which defines the event insured against was that contained in exclusion number 10, that the motor vehicle not be operated on a journey where any part of its destination was in excess of the nominated radius from the plaintiffs’ base of operations as stated in the schedule.

25. [25]
    The schedule lists six separate vehicles, of which the relevant vehicle was number four. Three of the vehicles are trailers, and for each of these the schedule states: “radius: Austwide” (presumably Australia wide) whereas for each of the other vehicles, including the subject prime mover, the schedule states: “radius: 450kms”. The defendant noted that this limitation came to be in the schedule at the choice of the plaintiffs: the proposal form which is attached to the agreed facts after identifying the relevant vehicle states on page 2 in answer to question 6: “Will the vehicle operate outside a destination radius of 150kms from this address?--Yes.” The proposal form then seeks the radius required from the base, but that part of the form was not completed. However, on a subsequent document also attached to the agreed facts, and identified as a “closing instruction” from the plaintiffs’ insurance brokers, there is a statement in relation to the proposed policy “location : limited to 450kms radius from insureds home base”. It was submitted on behalf of the defendant that this showed that the limitation was included in the schedule of the policy at the request of the plaintiffs, and it was submitted that I should infer that the existence of this limitation was of some relevance in determining the premium charged on the policy.^[3]

Preliminary objection

26. [26]
    Objection was taken by the plaintiffs to reference to the closing instruction, on the ground that this was a pre-contractual document and that it could therefore not be taken into account in construing the written contract constituted by the policy which subsequently issued: Nosic v Zurich Australia Life Insurance Ltd [1997] 1 QdR 67 at p. 78.  It was not part of the objective framework and facts which provided the setting within which the contract came into existence:  Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 237 at 352.  The defendant however submitted that the document was not inadmissible extrinsic evidence of intention, but rather part of the policy, on the basis that the policy on its second page said at the top:  “This policy together with the schedule, endorsements, proposal, statements and declarations sets out the agreement between you and us, and all of them form part of this insurance and are to be read together as if they are one.”  That was sufficient to incorporate the proposal form in the contract and permit reference to it, and the defendant’s argument was that the closing instruction, by incorporating reference to the area of operation in respect of which the cover was sought, was functioning as part of the proposal form in that it involved completing what had been left as a gap in the proposal form, because of the incomplete answer to question number 6.

27. [27]
    I agree that it did appear to fulfil that function, but I do not think it follows that that document is incorporated in the contract because it fills a gap in the proposal form. Otherwise it would be necessary to read the reference in the policy document to the proposal as being a reference not merely to the proposal form itself, but to any other document which subsequently added to, or perhaps modified, the information contained in the original proposal form. It was not submitted that the closing instruction was a “statement or declaration”, and in my opinion it is distinct from the proposal form and therefore is not incorporated in it, and therefore not incorporated in the contract.

28. [28]
    However, in my opinion there is no ambiguity about this operation of the policy when the schedule and exclusion (10) are read together. In the case of this vehicle, cover was not provided in respect of loss caused while it was being operated on a journey where any part of its destination was in excess of 450kms from Jimboomba. I do not see why it should matter in terms of the issue I have to decide whether that restriction was inserted at the behest of the plaintiffs or the defendant.

Analysis

29. [29]
    The difficulty in the present case is that the majority in Hospital Care provided little guidance as to how a court was to identify those restrictions or limitations which were inherent in a claim, that is in the case of a policy such as this part of the definition of the event insured against, and those which were not so that they could be subject to relief under s 54(1).  One thing which was made clear was that the issue did not depend on the location within the policy of a particular clause relied on, or any other aspect of the form of policy:  p. 656.^[4]  The fact that this limitation appears in an exclusion rather than in the insuring clause is therefore not in itself of any relevance.  The effect of the majority judgment seems to be that the court simply has to determine what is the substance of the essential elements of the event the occurrence of which can be the basis of the claim under the policy.  However, how that will operate in a particular case may well be largely a matter of impression.

30. [30]
    In my opinion the restriction of cover to the use of the vehicle on journeys where there was no destination more than 450kms from Jimboomba is a necessary part of the definition of the event insured against under this policy, so that it was a restriction or limitation which was inherent in the claim. The policy on its true construction insured this prime mover on some journeys but not all journeys: it was therefore necessary in order to make a claim to be able to show that at the time of the accident or theft the prime mover was engaged on a journey in respect of which cover was provided. It could not be a proper claim under the policy unless that element was present. Because of the terms of the policy, in order to make an effective claim it was necessary to claim in respect of a journey where there was no destination outside the 450kms radius. A claim which did not include that element was simply not a claim in respect of an event insured against under this policy.^[5]

31. [31]
    Accordingly I think it follows that if a claim is made where, as here, the vehicle was engaged on a journey with a destination beyond the 450kms limit, the defendant is entitled to reject the claim, not because of any act or omission on the part of the plaintiffs or anyone else, but because the claim is not in respect of an event which falls within the scope of the cover provided by the policy. Section 54(1) cannot in terms operate. Although in this case the effect of the contract is that the insurer is entitled to reject the plaintiffs’ claim, it cannot be said that it is entitled to do so by reason only of any act or omission of the plaintiffs (or anyone else). It is entitled to reject the claim because, on the fact of this particular claim, there did not occur an event in respect of which cover was provided by the policy.

32. [32]
    It was submitted on behalf of the plaintiffs that an act of theirs could be identified which was the act on the basis for which the defendant was purporting to reject the claim, and that this therefore was an act in respect of which relief was provided under s 54(1). The act relied on was taking the vehicle on a journey which had as a part of its destination a point in excess of 450kms from Jimboomba. But in my opinion that is not an act which brings s 54(1) into operation, because it cannot be said that the insurer is entitled under the contract to refuse to pay the claim by reason only of that act. That is because, had that act not occurred, it would not be the case that there would have been an event insured against in respect of which a claim would have been made which the insurer was obliged to pay under the contract. Had the plaintiffs (or someone) not taken this vehicle on this particular journey, this particular accident would not have happened.

33. [33]
    It is necessary to focus on the claim which is actually made,^[6] that is on the actual circumstances of the particular event giving rise to the actual claim.  It is not a matter of comparing the facts of the actual claim with the facts of a hypothetical claim which differed only from the circumstances of the actual claim by reason of the absence of some act present in the actual claim, or present in the hypothetical claim some act which in the actual claim became an omission.  Reliance on that particular fact as the relevant act would need to convert the claim in fact made into a claim based on a hypothetical journey to a hypothetical destination, presumably just inside the point at which a journey to Sydney would intersect the 450kms radius from Jimboomba.  That approach does not it seems to me to be consistent with the approach required by the joint judgment at p.659.^[7]

34. [34]
    This analysis is in my opinion also consistent with the approach adopted by Kirby J: p. 674-5. In the present case the reason for the insured’s refusal to pay is properly classified by the law as the absence of relevant cover between the insurer and the insured, not the act of taking the vehicle on a journey which had a destination in excess of 450kms from Jimboomba, any more than it was the omission of the insured to obtain cover that was more ample, and covered the motor vehicle when used on journeys as far as Sydney. The causal relationship required by s 54(1) of the Act has not been satisfied.

35. [35]
    In my opinion in the present case the identification of the journey as one where no part of its destination lay beyond 450kms from Jimboomba was a necessary part of the claim. This is therefore a restriction or limitation which is inherent in the claim, because it is part of the definition of the event in respect of which a claim can be made. It therefore cannot be overcome by reliance on s 54(1). While the vehicle was being used on this journey, it was not covered by the contract of insurance, and there was therefore no event insured against by this policy in the course of that journey. The plaintiffs have no entitlement to claim on this policy, on the basis of the agreed facts. Section 54(1) of the Act does not assist them.

36. [36]
    It was submitted on behalf of the plaintiffs that the expression “radius : 450kms” was not part of the description of the motor vehicle in the schedule. I agree : it fulfilled the purpose of nominating the radius from the base of operation for the purpose of exclusion number 10. It does not follow however that it is not as essential element of the definition of the event insured against by this policy. The plaintiffs submitted in effect that all that was required to satisfy the event insured against was that there must be loss or damage arising from accident or theft in respect of a motor vehicle described in the schedule during the period of insurance while the motor vehicle was being used in connection with the occupation or business of the plaintiffs. However, it is not obvious why the use of the vehicle in connection with the occupation or business should be treated as part of the definition of the event insured against, but the operation of the vehicle on a journey where any part of its destination was in excess of 450kms from Jimboomba should not. The difference between those two provisions in this policy is a difference of form: one is referred to in the insuring clause, the other is in an exclusion. But that is precisely the difference which the High Court has said does not determine the question.

37. [37]
    Once the distinction of form between those two provisions is disregarded, it is difficult to see any difference between them as a matter of substance. If the prime mover is involved in an accident while it is being used to go on a picnic (within 450kms of Jimboomba) it is not covered by the policy.^[8]  In the same way, the policy does not cover the prime mover if it is being operated on a journey to a destination beyond 450kms from Jimboomba (for the purpose of the plaintiffs’ business).  There is in my opinion no difference in substance between these two limitations or restrictions:  either they are both part of the essential definition of the event in respect of which cover was provided by this policy, or neither is.  The attempt on the part of the plaintiffs to distinguish between them shows the weakness of the plaintiffs’ argument.

38. [38]
    I also do not think that it is particularly helpful to try to derive some analogy with the actual result in the Hospital Care case in terms of the restrictions or limitations found by the majority to be inherent in the claim in the context of the particular policy then under consideration.  Under that policy, and in the particular circumstances under consideration by the High Court, it was necessary to identify particular matters which were quite different from “the event insured against”, because a “discovery” contract was different from an occurrence based contract, as pointed out at p. 659 in the joint judgment.  I do not think that the fact that the particular limitation or restriction then under consideration was held by the High Court not to fall within the limitations or restrictions inherent in the claim in that case provides any indication that the particular restriction or limitation which I have to consider ought not to be treated as part of the restrictions or limitations inherent in a claim under this policy.  Overall I did not find the arguments on behalf of the plaintiffs persuasive, and preferred the submissions made on behalf of the defendant.

39. [39]
    I therefore order:

1. That the question of whether, on the facts agreed between the plaintiffs and the defendant, s 54 of the Insurance Contracts Act 1984 (Cth) applies so that the defendant may not refuse to pay the plaintiffs’ claim, be decided in advance of deciding the other questions of the proceeding.

2. That question be heard and determined forthwith.

3. That question be answered:  “No”.

I will circulate these reasons, and provide submissions on whether any other order should be made as a consequence of my answer to this question.  I suspect however that it will be appropriate for me at least to order the plaintiffs to pay the defendant’s costs of the application to be assessed.  If agreement cannot be reached between the parties on whether and what further orders are appropriate, this matter should be listed for further hearing.